The conventinal economic analysis fails to solve the economic problems that modern countries are facing. the fact is that there is an escape tendency from the real factors affecting the economic scenarios, which do often change from time to time, so please discard the policy of demand and supply and face the real facors boldly.

I agree with you sir. Some economics consepts cheat our human side

Economics is a social science. However, the old theory of demand and supply completely disregards the 'social' part of it: 'Social' refers to a characteristic of living organisms. IF you take the human element out of economics, and make it all about goods, services and profit, you are no longer dealing with economics

I agree but lack the knowledge of a better form. When dealing with millions of people in a constantly changing economic environment, what can we do to better predict and alter our economic future in a stable and progressive way?

@Travis Buechner "When dealing with millions of people "

In my opinion, this is exactly where the methods of statistical physics should be efficient. While individual behavior of each person can be very complex and impossible to describe, the behavior of millions of people may admit simple description in terms of a few parameters, similar to thermodynamic quantities in statistical physics.

Do economists really not take statistical physics into account right now? That was where most aspects of supply and demand came from. There is a lot more we could do with statistical physics to make predictions more accurate but I think the problem goes deeper and has more to do with our out of control expectations of exponential growth in a finite environment... Oil

All over the world the common people are protesting for their rights and lives. The modern Economists fail misserably to find a solution to the unhealthy economic scenarios in this world. Let there be democracy or not, in all countries, the majority are facing severe economic discrepancies.

It has to do with turf. Samuelson's book on foundations appears to be based on modeling dynamical systems. The irony is that several, if not most, of the Nobel Prize winners in Economics have advanced degrees in mathematics or physics. And almost all of them attended certain types of schools where it appears mathematical modeling of economic problems were de rigeur in their PhD programs. As a result, many of them did not really learn economics until they were out of graduate school. There, they were hired and used graduate students as practice dummies to hone and refine their skills, and they read "intuitive economics" literature which the "mathematicized". Go read the autobiographical statements of the Nobel Prize winners in Economics posted at the Nobel website. Unfortunately, if a student with a strong math or physics background selects the wrong graduate school to attend to do economics (or even finance) , i.e. one that only pays lip service to quantitative background, he or she will be very frustrated.

A better approach would be to use microfoundations of human behavior and then build "large sample models" that identify "limiting distributions". After all, no one has "proven" that human beings behave like atomic particles. We generate our own stochastic processes that may appear similar to Brownian motion on a chart. But it is not Brownian motion. Our stochastic process is in the domain of attraction of a stable law. Of which Brownian motion is a highly restricted member. So by simply plugging in economic variables in physics formula may actually be picking up phenomena that can also be explained by microfoundations from behavioral theory--not physics. Even though some of the methods of mathematical physics in particular will be employed in a behavioral theory that performs just as well or even better than statistical physics models with plug in economic variables.

For years Nick kaldor, Joan Robinson, etc have been saying that about equilibrium economics, and 99% of economists agree. Math is not the problem; math itself has contributed hugely to human progress.

By the way, there has been a change in conventional economics. The neoclassical economics approach in which the market always clears and in which the market takes care of everything has been hybridized and influenced the so called Neo-Keynesian school. Perhaps most important, neuroeconomics and other interdisciplinary approaces steeped in psychology seems to be the latest "fad". In particular, Khaneman and Tversky (1979, 1992) prospect theory approach has quickly replaced the Von Neuman Morgenstern utility approach. The former showed that people actually use nonlinear probability weighting schemes to compute risk neutral evaluations. And that instead of utility functions they use a value function which is kinked at a reference point. Its convex over losses and concave over gains to reflect risk seeking over losses and risk aversion over gains. I am putting the finishing touches on an operator theory that "explains" the seeming dichotomy between the VNM and KT approaches. They are really duals. Econophysicists should love my theory when its posted. I show how to construct the operator and show how the point spectrum represents the set of values one should obtain in a well designed experiment. Much like Schrodinger's operator resolved issues in quantum mechanics.

Greece is facing economic trauma, the so called problem solver economists and world banks failed misserably to tackle the issue. It is always better to ask the little boy to speak out the truth"" is the King Naked'''

Who wants to pay more taxes? What would happen if you give a typical teenager a credit card and tell him or her that it doesn't have to be paid for the next 30-years during which time credit is rolled over and interest is charged?

What would happpen to an economy where the savings and profits accumulated over the past years fails misserably to buy any goods and services. there are somany ecocnomic theories and isms but all are fake ones and none really manages an economy in a smart manner.

The conventional economics has interest/debt in its structure. Do eliminate interest/debt and you will get another economics.

Is zakah can substitute tax? Or both of them must be done?

How do I contact?

You pose many difficult questions. I will not be able to answer them all here. I will have to forward a more nuanced response via your e-mail because they will include references However, suffice to say that my current research on behavioural economics address how people make decisions under conditions of risk and uncertainty. In a recent paper entitled "The Source of Uncertainty in Probabilistic Preferences Over Gambles" (see link) I show mathematically that people emit behavioural quantum waves when faced with decisions under uncertainty or ambiguity. Thus, in aggregate, a group of people would generate a stationary cyclic pattern. While we may be able to predict the behaviour of the group, just like in quantum mechanics, we will not be able to predict the behaviour of the individual. In other words, we are still faced with Heisenberg's uncertainty principle in laboratory experiments that purport to measure human behavior. What does that have to do with economics? Well, a lot of volatility in financial markets--which purportedly reflect the real economy--stems from investors fear [of uncertainty] (or greed) about the future. So at least it appears as though the source of volatility may be generated from behavioural quantum waves.

http://papers.ssrn.com/sol3/topten/topTenResults.cfm?groupingId=1314042&netorjrnl=jrnl

May I raise simple issues that have to be resolved. Look at supply curve Positively correlated with price. look at this situation; When i ask the apple seller an apple -he replied 15 rupees. I asked him If I take three- he said Rs. 40. Then I asked 6 means then came a ridicule 6 meansRs. 72 He said dozen means pay Rs.120 if you buy 100 Rs. 800 Then look at the price supply schedule Price(in Rs.) Supply

15 1

13.3 3

12 6

10 12

8 100 can conventional theory explain?

Scarcity lead to choice; If i have a pair of dress i just wear it and go off. If I have 10, which one to choose..here also we have choice problems. So we have to try some explanation from conventional to current.. These are confusions I have in my small mind

You just constructed a downward sloping demand curve in which the area under the cure is: Revenue=Price x Quantity. The apple seller knows this either explicitly or intuitively. Assuming that he paid 5-rupees for each apple, he makes a profit with each (price, quantity) schedule you surmised. Of course, if [s]he paid 8-rupees per apple, [s]he makes nothing in the last price quantity setup. When you aggregate that behaviour over India, you get an aggregate demand curve. However, there is a catch. Somewhere in India, there will be somebody dumping apples below their cost for whatever reason. So that would implicate the downward slope of the aggregate demand curve and introduce measurement error. In some cases, as you may know, involving goods of ostentation, when the price increases people buy more. So again, we have to look at the behaviours behind the action to formulate a coherent model.

If you look at from the supplier side he quotes this and it looks downward sloping supply curve. More and more he supplies with less and less price!!!! same is the case of scarcity and choice Vs abundance and choice..

In the example, I specified that the apple seller could not offer a downward sloping price schedule if her cost were above price. When you plot her cost of purchasing apples, you will see that she incurs more costs the more apple she buys--even if the per unit costs decreases up to a point. Your example assumes that the apple seller is a monopolist. However, more than likely she is in a competitive market. If the market prices of apples goes up due to increased demand, i.e., a shift in demand curve--not a movement along the demand curve--then the supply curve slopes upwards. Also, the supply curve is tied to the total cost curve which is upward sloping.

In housing investments when the population target is specific say students from non residential institutions, the more the supply of accommodation the lesser the demand for those properties that do not meet their taste, the lower the later prices. in other words the Supply theory is still valid. We only need to be thorough in our analysis to appreciate it.

Conventional economics makes many unrealistic assumptions: 1. All players are rational and act independently - they do not repeat mistakes, do not imitate, have full information and equal capacity to use and analyse this information.

2. Individuals are propelled by only one impulse - self interest .There is no place for altruism. 3. GDP should always be increasing form the system to survive - which is impossible and unsustainable. Is more always better than less?

In ordinary world, especially in my place we can dicharge of the conventional theory..,we can discharge the conventional theory but to explain that there's already conventional theory too...so can you explain more specific..tx

A good theory should be like a coherent guidepost. A sort of GPS if you will. It should explain aspects of empirical regularity with minimal assumptions or parameters. No single theory or group of theories could be expected to explain our realities. Unlike natural sciences where experiments can be replicated under 'ideal conditions" with "known" predictable results, human beings change their minds even when faced with the same set of predicate facts. See e.g., http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1971954 A recent research paper used a mathematical model of behavioural economics to develop a confidence index which does a fairly good job of replicating the Gallup Daily Economic Confidence Index. The latter is based on telephone surveys, and the former on a model and simulations. See e.g., .https://sites.google.com/site/behavioraleconometrics/ and http://ssrn.com/abstract=2003319 for details.

Unfortunately, we had the will or the capacity to face the reality that conventional economics has two basic contradictions, starting with its definition, the first is that it explains the functioning of the economy from the perspective of ethics and morality, not support the human evils such as greed, avarice, and so on., the basic assumptions that underpin not apply in reality. The other contradiction is that the ultimate goal of economics is to increase or improve human welfare, and instrumentation that has been built or proposed to explain behavior in economic activities are aimed at improving the profitability of capital. This is reflected in statistics on GDP, population in poverty, overexploitation of natural resources and levels of air pollution, soil and water. This is evidence of gaps and / or deficiencies of conventional economics.

Jesus, with all due respect, when I was first introduced to economics it was defined as the study of the distribution of scarce resources. How does one ration a scarce or limited resource? Presumably, it goes to the most productive. Those who are better able to convert it to much higher value. So while a country like Somalia may need energy, a country like the US would make more productive use of energy. We should not forget "the Japanese miracle". Compared to the size of its economy, Japan has the least natural resources of almost all developed economies. Yet, its human resource is unsurpassed. Whether we like the fact that Japanese society is rigid or whether it may be sexist or what have you from Western eyes, they developed a system that works for them.

"the ultimate goal of economics is to increase or improve human welfare" for which "its human resource is unsurpassed" sounds cannibalistic, isn't it?

I think in conventional economics something is wrong with the term "human resource" itself.

Nikolay, I am not sure that Economics is designed to improve human welfare per se. Economics is a "social science" that purportedly studies how wealth, income, means of production, etc. are distributed in society. And how "rational" (don't ask me who gets to decide what rational is) decisions affect that process. I am not sure that Economics is in the business of improving or destroying welfare. Its supposed to study how and what affects welfare. Politicians are the ultimate arbiters of economics. Economists could advise and propose. But politicians decide.

Geoffrey, I would advise to reconsider the axiom "human resource" which sounds absurdly in knowledge era where knowledge is impossible to separate from human being, only copy it (do not ask me what knowledge is). Reward in exchange for knowledge to this regard looks like a sort of reward on capital impossible to separate, not like wages. But if to go this way, "usury (interest)" and "knowledge" can not get on in one axiomatic scheme of the conventional economics. That is why, I think, knowledge economy is not yet reality - no proper wide spread definition of knowledge, therefore no measurement of knowledge, therefore a deadlock of the social science which is fruitless to advise politicians in the age of debt crisis.

Nikolay, there's a research paper on the impact of Russian mathematicians on American mathematicians productivity after the collapse of the Soviet Union that may be of interest to you. It pertains to "knowledge economy". Its available at

https://sites.google.com/site/behavioraleconometrics/educational-papers

Thanks Geoffrey, I'll read it.

Geoffrey, Seems to make a description of economic science as a photographic camera, which emphasizes its reductionist analysis

Human health is very promising issue due to the fact that it is impossible to separate health from living humans. It leads beyond debt based economics in which every asset must be separated from humans and where humans are resources. Almost the same problem is with knowledge - you can not separate it from humans except its copies.

I find it very difficult to find a concrete proposal of a model of human health and development, surely there are many papers on this subject, but are addressed in isolation. The interrelationships of the components are very complex given the transversaty of the issue of human health and development. To mention some, ecosystems, cultures, ethnic and economic activities. Perhaps through the World Health Organization can find something that fits

Economics has lots of human behaviour in it and have to be dynamic and keep changing that is the convention

Demand and supply was discarded in the 70s when Economist started getting to grips with market failure due to information problem, increasing returns to scale and externalities. Economics is defined by the methodology it uses - strategic interaction of individuals that are pinned down axiomatically. With the methodology, you can use it to achieve any objective that you want to. The characterisation of Economics above seems unfair and seems to stem from the colloquial understanding of Economics. For instance, James Mirrlees legendary single crossing condition which allows people to solve adverse selection problems cannot be characterised as anything but revolutionary. I think in the discussion above, as often happens, people confuse economics with what is the colloquial understanding of Economics.

Exactly, economics (like many other disciplines) is like a language. Once you know the language, you can write anything you want to. The main mythological innovation in terms of theory is the contract theory literature. Mirrlees is just an example of why markets never fail. Since then almost most of Economics is about how transactions take place when market fails and how non-market institutions emerge as a solution.

One simple example of a non-market institution is a contract. For this, a good place to start is either "Contract Theory" by Patrick Bolton and Mathias Dewatripont (Author) or "A Course in Game Theory" by Martin Osborne and Ariel Rubinstein. The other big leap is in the area of Econometrics. A accessible starting point is "Mostly Harmless Econometrics: An Empiricist's Companion"by Joshua D. Angrist and Jörn-Steffen Pischke.

I have a note that wrote for my students about non-market institutions where I have put down my thoughts. The note is accessible at: Hope that helps.

Shawn, regarding you earlier question about model for human health and development, you could take a look at the reading list I have for my students on this subject. The article that put this in a interesting (non-strategic perspective) is Dasgupta, P. and Weale, M. (1992). “On Measuring the Quality of Life”, World Development 20, pp. 119-131. For a complementary perspective, you could look at or Galor, O. and Zeira, J. (1993). “Income Distribution and Macroeconomics.” Review of Economic Studies, 60(1):35–52. There is also a nice short clip about a IGC project that is currently underway. .

See this spanish link: www.ucm.es/info/cecal/encuentr/areas/economia/1e/casado.htm

Another link: http://www.tda.ch/documents/qol.pdf

In this connection I am sending you another two links

http://www.qub-efrg.com/fs/doc/working-papers/is-human-development-multi-dimensional-jid-revision.pdf

ftp://zappa.ubvu.vu.nl/20070013.pdf

I think the o well-being cover many inherent in the social, cultural etc. Because mankind is a reflection of the system that surrounds it.

I think we have to look back in economic thinking like classical's great visioun than Neo Classicals who always looked at partial equilibrium